TP offers smorgasbord of TP arguments - Tax Court imposes $15k penalty

[jcolvin2]

https://www.ustaxcourt.gov/InternetOrde ... 3&Todays=Y

Pursuant to Tax Court Rule 50(f), orders shall not be treated as precedent, except as otherwise provided.

UNITED STATES TAX COURT
WASHINGTON, DC 20217
JAMES W. HARRIS, )
)
Petitioner, )
v. ) Docket No. 3596-18 L.
COMMISSIONER OF INTERNAL REVENUE, )
)
Respondent )
ORDER AND DECISION
This case is before us to review a determination (determination) by the
Internal Revenue Service Appeals Office (Appeals) following a collection due
process (CDP) hearing conducted pursuant to sections 6320(b) and (c) and 6330
(b) and (c).1 The Secretary seeks to collect from petitioner his unpaid Federal
income tax for his 2010, 2011, and 2012 taxable (calendar) years. Appeals
determined both that respondent's notice of intent to levy was appropriate and that it was appropriate to file a notice of Federal tax lien (NFTL) in order to assist in collection of that tax. Petitioner assigns errors to the determination; respondent denies any error. We review the determination pursuant to section 6330(d)(1). Respondent has moved (1) for summary adjudication in his favor on all issues in this case (MSJ) and (2) to impose a penalty under section 6673(a)(1) (penalty motion); petitioner objects to our granting either motion. We grant both motions.

Summary judgment expedites litigation. It is intended to avoid unnecessary
and expensive trials. It is not, however, a substitute for trial and should not be used to resolve genuine issues of material fact. Eg., Estate of Powell v. Commissioner, 148 T.C. 392, 397 (2017). We may grant summary judgment "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits or declarations, if any, show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law." Rule 121(b). The moving party bears the burden of proving that no genuine dispute as to any material fact exists.

In support of the MSJ, respondent relies on the pleadings, relevant documents from his administrative files, and a declaration of Michael Edwards (declaration), the Appeals officer who conducted petitioner's CDP hearing, along with attachments to the declaration. Petitioner has provided no declaration or affidavit supporting his objection to the MSJ. He supports that objection with approximately 50 pages that he represents he provided to Appeals.

Background

We draw the following facts from the pleadings, the motions, the declaration, and the documents provided by respondent from his administrative files. We believe the following facts to be uncontroverted and so find for purposes of this order and decision.

Petitioner resided in New Jersey when he filed the petition.

Petitioner made no returns of income for 2010, 2011, and 2012. Pursuant to
section 6020(b), respondent prepared substitute returns for petitioner and,
subsequently, sent to him notices of deficiency in tax for those years (deficiency
notices). Upon petitioner's failure to petition the Tax Court in response to the
deficiency notices, respondent assessed the unpaid tax along with interest and
penalties and gave petitioner notice of the unpaid amounts and demanded payment. Respondent also sent petitioner notices of respondent's intent to levy and notices of his filing NFTLs and informed him of his right to a CDP hearing. In response to the those notices, petitioner submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing, relating to his unpaid income tax liabilities for 2010 through 2012. In the request, petitioner stated the reasons for his disputing respondent's collection actions to be:
1. No statutory notice of deficiency received.
2. Not the person subject to levy, pursuant to 26 U.S.C. 6331(a).
3. Not liable.

Petitioner's request was assigned to Appeals Officer (AO) Michael Edwards,
who, in preparation for a telephone conference with petitioner, reviewed materials he received from petitioner. AO Edwards reports that those materials contain the following frivolous claims made by petitioner. The provisions for levy and distraint to collect unpaid taxes found in section 6331 are "not imposed upon American Nationals[,] i.e., he has no income connected to the federal government and he is not domiciled in DC. " Also: "James W. Harris is a fictitious corporate/trust entity", "he [petitioner?] is the natural person", and "the government must produce the contract wherein he was made a surety for any tax debits [sic] of the entity." And: "[T]he * * * [Internal Revenue Code] is not self-enforcing. It is not law for the general public." AO Edwards accorded petitioner a telephone conference and, thereafter, determined the following. The deficiency notices had been sent to petitioner at his last known address. The resulting assessments of tax were valid. Notice and demand for payment had been sent to petitioner. Although he had afforded petitioner an opportunity to challenge his underlying tax liabilities for those years,
petitioner had refused to provide returns or other information from which to
redetermine his tax. Petitioner had neither requested a collection alternative nor
provided any information to support the same.

On January 19, 2018, Appeals issued petitioner the determination. Petitioner
timely filed a petition assigning error to both the determination and to the
deficiency notices. By order dated May 18, 2018, we granted respondent's motion
to dismiss for lack of jurisdiction so much of this case as relates to deficiency
notices on the grounds that the petition was not timely filed with respect to the
deficiency notices. We also ordered that all references in the petition challenging
the deficiency notices are deemed stricken. With respect to petitioner's assignment of error to the determination, he avers that (1) he never received a notice of deficiency for 2010, 2011, or 2012, (2) he never received a certified notice determination for those years, (3) the determination does not bear a certification and, thus, is not valid, and (4) the determination is not accompanied by a Form 23C, Certification of Assessment. Respondent answered the petition, denying he erred as alleged.

MSJ

By the MSJ, respondent asks for summary adjudication in his favor on all issues in this case. With respect to petitioner's averment that he never received a notice of deficiency, respondent claims on the basis of the declaration that notices of deficiency for 2010, 2011, and 2012 were sent to petitioner by certified mail at his last known address and that was a sufficient predicate for respondent to assess
tax in the absence of a timely petition to this Court. See secs. 6212(b)(1), 6213(a);
Davis v. Commissioner, T.C. Memo. 2018-197, at *9-*10.

With respect to petitioner's second, third, and fourth averments, concerning
the determination, respondent argues that, "[w]hile petitioner's arguments are
unclear, * * * [respondent] is unaware of any body of law, including sections 6320
and 6330, regulations promulgated thereunder, and case law, requiring that a notice of determination be certified or that a notice of determination be accompanied by a Form 23C [Assessment Certificate-Summary Record of Assessment]. See I.R.C. secs. 6320, 6330, Treas. Reg. sec. 301.6330-1." (Footnote omitted.) Respondent adds that, "[w]hile it does not appear that petitioner is alleging that the notice of determination was not issued via certified mail, to the extent so, Appeals properly issued same via certified mail in accordance with section 6330."

Respondent argues that there remains no issue of material fact in dispute and
that he is entitled to summary judgment as a matter of law.

Petitioner's Objection

In response to the MSJ, petitioner argues that respondent has no authority to execute returns under section 6320(b) so that "the returns are null and void", "the deficiency notices are null and void", and "there is no valid case against me".

He supports his argument with approximately 50 pages that he claims he
provided to Appeals to show that his claim that he had no tax liability was not
frivolous. The majority of that material concerns his purported "revocation of election", "revoking his status as a federal U.S. citizen 'taxpayer'." He claims: "Affiant will no longer be 'volunteering' or 'electing' to be treated as a federal taxpayer or U.S. citizen or as a 'surety' for any government created entity connected to Form 1040 federal income tax 'contributions.'" A sample of his arguments as to why he can elect out of paying Federal income tax is as follows.

Affiant declares here that he is a natural person man alive and well in
the Constitutional Republic of New Jersey without (not within) the
juristic statutory foreign jurisdiction of the IRS and nothing in the IRC
applies to 'natural persons' (unless by election)
* * *
* * * * * * *
* * * Affiant, as an American National with a Revocation of Election
duly sent to you and the IRS, cannot now be classified as a "taxpayer"
as he is not subject to any "internal" (to D.C.) revenue tax and you are
"duty bound" and required to accept Affiant's Revocation of Election
documents and change Affiants's tax records to indicate "nontaxable."

The IRS appears to be a "trust" domiciled in Puerto Rico as per 31
U.S.C. 1321 (a) (62) and the IRS is not an agency of the federal
government as that term is defined in the Freedom of Information Act
(FOIA) and the Administrative Procedures [sic.] Act in 5 U.S.C.
551(1)(C).

Affiant fails to understand how the IRS, domiciled in Puerto Rico, can
have any "personam," "venue," or "subject matter" jurisdiction over
him without his expressed consent, which he has never granted to the
IRS.

Discussion

MSJ

Rule 331, governing the commencement of a lien and levy action, provides
that, the petition must contain clear and concise assignments of each and every
error which the petitioner alleges to have been committed in the notice of
determination and: "Any issue not raised in the assignments of error shall be
deemed to be conceded."

Respondent has adequately answered petitioner's assignments and we see no need to elaborate his reasoning. Moreover, petitioner has not addressed respondent's grounds for summary adjudication and his only possibly cogent response to the MSJ is that respondent has no authority to execute returns under section 6020(b). Case law is to the contrary. See, e.g., Winslow v. Commissioner, 139 T.C. 270, 273-274 (2012); Full-Circle Staffing, LLC v. Commissioner, T.C. Memo. 2018-66 at 41, n.16. We will grant the MSJ.

Penalty Motion

Respondent asks that we impose a penalty against petitioner under section
6673(a)(1) "as petitioner instituted this proceeding primarily for the purpose of
delay, and petitioner continues to take actions, as in the present case, based on
frivolous and groundless legal positions." Petitioner answers that he did not
institute this proceeding for delay as evidenced by the documents he submitted in
support of his objection to the MSJ.

Section 6673(a)(1) authorizes the Court to require a taxpayer to pay 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 the proceeding is frivolous or groundless, sec. 6673(a)(1)(B). A taxpayer's position is frivolous if it is contrary to established law and unsupported by a reasoned, colorable argument
for change in the law. Eg., Rader v. Commissioner, 143 T.C. 376, 392 (2014), affd in part, appeal dismissed in part, 616 F. App'x 391 (10th Cir. 2015).

Petitioner filed no returns for 2010, 2011, and 2012. Neither did he file tax
returns for 2003 through 2006, Harris v. Commissioner, T.C. Memo. 2012-275,
nor 2007 and 2009, Harris v. Commissioner, T.C. Memo. 2016-175. In the first of
those cases we characterized petitioner's action in bringing that case as follows:
"Petitioner, by virtue of his deliberate disregard for clearly established precedents
requiring him to pay Federal income tax and file the related returns, has attempted to turn the IRS and this Court into a mockery for his shopworn tax-protester rhetoric." T.C. Memo. 2012-275, at *15. We echo that sentiment here.
Petitioner's assignments are groundless, as are his objection to the MSJ. The pages
attached to his response to the MSJ are filled with ludicrous, frivolous arguments.
Moreover, we are firmly convinced that petitioner instituted and maintained this
proceeding to delay respondent in collecting unpaid Federal income tax that
petitioner owes to the United States. Petitioner has wasted the Court's and
respondent's limited resources and deserves a substantial penalty. We will,
therefore, require petitioner to pay a penalty under section 6673(a)(1) of $15,000.

Upon due consideration and for cause, it is

ORDERED that respondent's motion for summary judgment is granted. It is
further

ORDERED that respondent's motion to impose penalty is granted, in that
petitioner shall pay to the United States a penalty under section 6673(a)(1) in the
amount of $15,000. It is further

ORDERED AND DECIDED that respondent may proceed with the collection action for the taxable years 2010, 2011, and 2012, as determined in the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, dated January 19, 2018, upon which this case is based.

(Signed) James S. Halpern
Judge

Entered: MAY 23 2019

¹Unless otherwise indicated, all section references are to the Internal
Revenue Code of 1986, as amended and in effect when the petition was filed, and
all Rule references are to the Tax Court Rules of Practice and Procedure. We
round all dollar amounts to the nearest dollar.
SERVED May 23 2019

[.]

This appears to be this clown's third bite of the frivolous nonsense apple in Tax Court, apparently without previous sanction(s). At least none mentioned in the decision, per usual.

Bang! 15K, right outta the chute. At least one judge has wised up to TP mendacity and shenanigans. No more long, drawn out over many years 1K-2K-3K-5K-10K penalty progressions, at least not from Judge Halpern. Maybe there's hope for the rest.

I would have gone straight to 25K -- 20K for wasting IRS and court time and 5K for being too much of an ignoramus to come up with an original nonsensical, junk, garbage "argument." All the while lobbying for an increase in the 6673(a)(1) limit to 100K or more.

Something about mules and 2x4s.

A higher limit won't change the behavior of anyone who is uncollectible but it might make anyone with real assets think twice before jumping repeatedly into the nut-job legal pool.

Who knows? Maybe one or more judges read this site. Lord knows this isn't the first time I and others have suggested banging these morons with much higher penalties for being ridiculous and obstreperous wasters of taxpayer money.

[The Observer]

I have moved on from the 25K frivpen. I am still much in favor of air dropping the frivvers over Somalia, North Korea or deep in the Amazon and let them experience life in another venue. Let's see if that cures them of the frivolity of which they partake.

[Manny]

My friend Moon was always good with money. Our wonderful friends at the IRS called him in for an audit. He watched as the overpaid examiner showed he owed $900.00.
Moon then took the pencil and showed the examiner how THEY owed HIM $900.00. So they split the difference.

[jcolvin2]

My friend Moon was always good with money. Our wonderful friends at the IRS called him in for an audit. He watched as the overpaid examiner showed he owed $900.00.
Moon then took the pencil and showed the examiner how THEY owed HIM $900.00. So they split the difference.

According to the 2018 IRS Databook, about 10% of audits result in no change, and 3% result in refunds. The number of audits resulting in refunds has gotten smaller over time, largely because the IRS has become better at selecting its audit targets.

Why do you call the examiner "overpaid"? It sounds like the Revenue Agent did what he or she was supposed to do: he or she reached preliminary audit results and communicated those results to Moon, listened to Moon's side of the story, and then came to the correct result, which was no adjustment.

[Famspear]

The last time I checked, a person hired by the Internal Revenue Service as an entry-level Revenue Agent would come in at GS-5. Revenue Agents are generally in the range of GS-5 through GS-11.

Under the revised General Schedule for 2019 (incorporating a recent pay raise), an entry level Revenue Agent at GS-5 (at "Step 1") would apparently earn gross annual compensation of $33,959 if stationed in areas of the United States outside of certain specified metropolitan areas. The highest pay rate for a GS-11 (step 10) -- generally meaning many, many years of experience and promotions -- for most such "outside" areas would be $80,912.

Now, looking at just a few of the metropolitan areas: In New York City, an entry level Revenue Agent hired at GS-5, step 1 would apparently make an annual gross of $39,053. In Los Angeles, $38,586. In Houston, $38,900.

In New York City, a GS-11 at step 10 could be making $93,077.

[Famspear]

I just found a posting for an opening for an IRS Revenue Agent at GS-14, starting at $104,821 or higher.

So, things appear to have changed the last time I checked!

EDIT: It's not a position for just any 'ol Revenue Agent. It's for a "Senior Program Analyst". Here's an excerpt from the post:

WHAT DOES A SENIOR PROGRAM ANALYST DO? As an Internal Revenue Agent (Senior Program Analyst) you will be will be responsible for a full range of examination programs, including program/policy development and implementation, and evaluation of key nationwide examination programs that requires knowledge of professional accounting and tax compliance programs. In this role, you will work on a wide variety of program issues, including strategic examination program planning, business systems planning, and administrative support functions that are nationwide and/or service wide in scope. You will also provide coordination in the identification, development and resolution of technical examination issues that impact the operating units industries and programs.

As a IRA (Senior Program Analyst) you will:

Perform assignments that are agency-wide in scope and have significant impact on issues facing the Operating Unit. Examples include, participating in Business Reviews of field and headquarter offices; serving on task forces or study groups as the Deputy Director's representative to address divisional and Service wide issues; establishing policy for field operations and performing independent analyses of Area or nationwide SB/SE examination operations.

Lead teams of Operating Unit managers and employees; or independently studies complex problems facing the Operating Unit functions or those of particular concern or interest within the Compliance. This may require coordinating input from activities outside the division or identifying new or modified methods of performing work that requires the incumbent to demonstrate both expert analytical or process analysis skills and expert knowledge of professional tax accounting.

Analyze examination program areas to discern trends in program delivery such as effectiveness of incorporating various applications into audit and compliance processes, and consolidated report data to measure effectiveness in meeting baselines or the degree to which program plans and achievements support strategic agency initiatives. Serves as the process-analysis expert and applies skills to local or Service-wide issues.

Provide necessary technical advice and staff assistance to headquarters executives, headquarters analysts and field managers and employees in the assigned program area. Develops and prepares operating guidelines, instructions and other material pertaining to assigned program areas.

Determine the need for, and scope of, analysis of national technical issues through a multitude of sources to identify trends, conditions, and events that warrant uniform review or modification of existing audit procedures.

Serve as a technical expert on SB/SE examination program guidelines and policies, interprets, develops, adapts, and coordinates analytical reviews of new policies, procedures, and program requirements of the Service and their impact on the Compliance operations and resources. Advises and negotiates acceptance of conflicting issues with management in the formulation of Compliance policies. Applies and disseminates newly developed or revised policies and procedures for use in field operations.

[Famspear]

And, here are the posted qualifications for that GS-14 job:

GS-14 LEVEL: You must have 1 year of specialized experience at a level of difficulty and responsibility equivalent to the GS-13 grade level in the Federal service. Specialized experience for this position includes: experience defined as progressively responsible and diversified professional accounting or auditing work that required: knowledge of and skill in applying professional accounting principles, theory, and practices to analyze and interpret accounting books, records, or systems specifically to determine their effect on Federal tax liabilities and their adequacy for recording transactions affecting tax liabilities; skill in interpreting and applying Federal tax law for individuals, business and/or exempt organizations, partnerships, and corporations; knowledge of business and trade practices to develop tax issues based on analysis and evaluation of overall business operations and financial condition; knowledge of corporate financial transactions and financial management principles and practices; and, skill in interacting effectively with a broad range of individuals and negotiating with specialists in accounting, legal, tax, and other similar business related professions.

- The experience may have been gained in the public sector, private sector or Volunteer Service. One year of experience refers to full-time work; part-time work is considered on a prorated basis.

-To ensure full credit for your work experience, please indicate dates of employment by month/year, and indicate number of hours worked per week, on your resume.

In addition to the above requirements, you must meet the following, if applicable:
You must have been at the GS-13 level for 52 weeks (time-in-grade requirement).

In other words, this is not a front-line auditor/examiner job.

[The Observer]

I don't think Manny's friend's audit was handled by a Revenue Agent given the small amount involved in the audit finding. I am presuming that the audit was conducted by a Tax Compliance Officer (TCO) which is a postion that does not require the accounting degree/experience that a Revenue Agent would need.

Personally when I read it I got the impression that Manny's friend Moon wasn't exactly real. If he is, the story is probably a little more nuanced than "he got out a pencil and showed them...."

The IRS might have been wrong, and they may have dismissed the audit, and they might have even bothered to waste a day of that overpaid agent's time for piddling amounts, but altogether they sound like an urban legend to me. And calling someone who makes ~$75K a year and might be finding millions of dollars in underpayments overpaid is stretching a bit. He's not overpaid, he's just "da man" and that's what the problem is.

Sorry, I'm grumpy today.

ETA...as noted below, I cut off half of this post by mistake, and only the part in the Quotes is the original poster, the bottom part is all me...Moderator, Gregg

[Famspear]

I don't think Manny's friend's audit was handled by a Revenue Agent given the small amount involved in the audit finding. I am presuming that the audit was conducted by a Tax Compliance Officer (TCO) which is a postion that does not require the accounting degree/experience that a Revenue Agent would need [ . . . ]

Yeah, I have some literature from the Internal Revenue Service about TCOs that I downloaded a couple of years ago. It indicates that a successful candidate for a TCO position is usually a person with a bachelor's degree, generally in some business field, with about 6 semester hour credits of accounting. That's basically two semesters of accounting. TCOs have a career ladder beginning with GS-5, and going up to GS-9 or higher.

I dealt with a TCO in an examination conducted as part of a docketed Tax Court case a couple of years ago. She was slow in understanding the passive activity loss rule applicable where the taxpayer disposes of the entire interest in a passive activity. But, she was courteous and professional -- and she handled the matter expeditiously.

My client was happy. An asserted tax deficiency of over $35,000 plus interest was converted into a net tax refund of over $2,000. On behalf of the taxpayer, I sent the TCO a thank you letter, and I copied her group manager.

[Gregg]

Oh damn. Observer, I am so sorry.... I just meant to quote your comment, and it looks like I edited it...cutting the part I didn't want to use and...well, I screwed up pretty bad, and to the best of my knowledge there isn't any way to recover it. I'm really sorry. Not to mention I feel pretty stupid, too.

[Manny]

The last time I checked, a person hired by the Internal Revenue Service as an entry-level Revenue Agent would come in at GS-5. Revenue Agents are generally in the range of GS-5 through GS-11.

Under the revised General Schedule for 2019 (incorporating a recent pay raise), an entry level Revenue Agent at GS-5 (at "Step 1") would apparently earn gross annual compensation of $33,959 if stationed in areas of the United States outside of certain specified metropolitan areas. The highest pay rate for a GS-11 (step 10) -- generally meaning many, many years of experience and promotions -- for most such "outside" areas would be $80,912.

Now, looking at just a few of the metropolitan areas: In New York City, an entry level Revenue Agent hired at GS-5, step 1 would apparently make an annual gross of $39,053. In Los Angeles, $38,586. In Houston, $38,900.

In New York City, a GS-11 at step 10 could be making $93,077.

That's not alot of money anymore depending on location. My parents sold their home in Queens, NY for $30,000.00 in the early 1980s. It last sold for half a million; in a shitty dangerous neighborhood. I live VERY comfortably on $3,000 a month but I'm off the grid in the middle of nowhere. It was posted here that Moon did not deal with anyone important and I agree, Thank God he knew his (fecal matter).